Oil prices reached their highest level in over three months, driven by concerns that U.S. sanctions on Russia could lower its oil output. Goldman Sachs suggested that Brent prices could rise above $85 per barrel if Russian production declines further. The bank also noted that prices might touch $90 per barrel if the drop in Russian output coincides with reduced production from Iran.
U.S. President Joe Biden introduced the broadest sanctions package targeting Russia’s oil and gas revenues last Friday. These sanctions are intended to weaken Russia’s economy amid the ongoing conflict in Ukraine. Traders and analysts predict that these measures may compel Chinese and Indian refiners to source more oil from regions like the Middle East, Africa, and the Americas, leading to higher oil prices and increased freight costs.
Despite the potential for a price spike, Goldman Sachs maintains its base case scenario that Brent crude prices will stay within the $70 to $85 per barrel range this year.
Also Read: Why market is falling today: Investors lose over Rs 5 lk cr; 8 factors fueling Sensex crashBrent crude futures rose $1.35, or 1.69%, to $81.11 per barrel, reaching an intraday high of $81.44, the highest since August 27. U.S. West Texas Intermediate (WTI) crude climbed $1.40, or 1.83%, to $77.97 per barrel, hitting a high of $78.32, the highest since October 8.Following these developments, shares of oil marketers Hindustan Petroleum Corporation (HPCL), Indian Oil Corporation (IOC), and Bharat Petroleum Corporation (BPCL) dropped 2-6%. Airline stock InterGlobe Aviation fell over 6%.Meanwhile, tyre manufacturers such as Apollo Tyres and JK Tyres declined 2-3%, with paint companies Kansai Nerolac, Grasim Industries, and Asian Paints falling up to 3%, as crude oil prices significantly impact their input costs, affecting margins.Also Read: Q3 results this week: RIL, Infosys, Jio Finance, Kotak Bank among 101 companies to announce earnings
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